Foreclosures halted elsewhere but not here

The ads include mortgages issued by mega-lenders Bank of America, GMAC and Chase, three institutions that have halted foreclosure activity in 23 states in the last week.

Georgia is NOT among those 23 states.

In those 23 states, the foreclosure process is handled through the court system. A judge has to rule the debt valid and in default before the property is sent to auction.

Georgia, meanwhile, is a non-judicial foreclosure state. Taking back property in this state is as simple as filing a notice of default at the local courthouse and sending it to the borrower; sending the borrower a notice of sale 90 days later; posting the legal ad in the newspaper for three consecutive weeks; and reading the notice accurately at the monthly auction held on the courthouse steps.

As a metro Atlanta attorney puts it on his website: “Borrowers give up their rights to due process in court when they borrow. They give a power of attorney to the lender do one thing: sell their home if they get past due.”

Whether you agree with the process or not, we will soon see a climb in legal challenges to foreclosures. Large lenders, like the three that have halted foreclosures in the other states, are processing foreclosures en masse and in some cases are not thoroughly reviewing documents as required by law.

A Bank of America official recently acknowledged in a court proceeding that she signed off on 8,000 foreclosures a month and typically didn’t read the documents. An employee with another large lender, IndyMac, allegedly signed more than 6,000 documents a week.

The so-called “robo-signers” can miss errors in those documents and invalidate a foreclosure.

And in the 23 judicial-foreclosure states, mistakes can led to large penalties from judges. Hence the lenders’ decision to halt foreclosures in those states.

Fortunately for borrowers in default here, government officials in non-judicial foreclosure states are lobbying for a moratorium in their backyards, too. Since Tuesday, the attorney generals of Minnesota, Massachusetts, Michigan and Texas have all asked lenders to stop until they can review the procedures. The U.S. Justice Department is also looking into the matter at the behest of Speaker of the House Nancy Pelosi.

Georgia officials have yet to call for a suspension of foreclosures here. It won’t be long, though, particularly with such a contentious election coming up.

For the curious out there, the 23 judicial-foreclosures states where foreclosures have been halted are: Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.